jakiro
Author: Degg_GlobalMacroFin, Source: Sina Weibo
PS: Picture 1 is from Banana2, and the prompt is that this long review has not been changed word by word.
My feelings after seeing this picture are shown in Figure 2
1. A “split” employment report.The new non-farm payrolls of 119,000 exceeded expectations of 50,000, which is the highest single-month new employment since May 2025, while the unemployment rate rose sharply by 0.116pp to 4.440%, which is the highest since October 2021.
2. Looking from the inside of non-agricultural employment
1) The government added 22,000 people and the private sector added 97,000 people;
2) Looking within the private sector, the 87,000 new jobs in the service industry are still the backbone of employment growth, of which 47,000 in casual dining and 59,000 in education and health are still strong;
3) Looking within the non-service industry, the manufacturing and mining industries decreased by 6,000 and 3,000 people respectively, but the construction industry increased significantly by 19,000 people. This is the largest monthly increase since 2024, which may be related to the pickup in real estate industry activities driven by the Fed’s interest rate cut (refinancing activities in the United States rebounded sharply after September);
4) The weekly working hours, which is a leading indicator of recession, remained at 34.2 hours and did not decline.
3. What is very interesting is that since the government shutdown has dragged on for more than a month, the recovery rate of the initial non-agricultural survey value in September was surprisingly high, as high as 80.2%, which is close to the recovery rate of the second revised value, which is about 90%.This is the highest level since the epidemic. The initial value recovery rate in the past few months has generally been 50-60% (of course, in theory, the second revised value should also be announced in early November).This means that the accuracy of this initial value may be higher than in the past few months.
4. We have previously analyzed that due to the decline in the accuracy of non-farm data, a better way to track new employment in the United States is to average ADP and the initial non-farm value.The average in September was 45,000, which is neither good nor bad.
5. Household surveys are more worthy of analysis.The unemployment rate of 4.44% is very close to the year-end 4.5% level in the Fed’s SEP in September, and the 4.5% unemployment rate corresponds to three interest rate cuts during the year in the dot plot. Therefore, after the unemployment rate was announced, expectations for an interest rate cut in December increased slightly.
6. But in fact, the overall household survey is not bad, or it can be said to be “just right”.
1) The number of new jobs added in the household survey in October was still 251,000, which is considered high in the past few months;
2) The labor force participation rate also increased by 0.12pp to 62.45%.Under this supply-side improvement, new entrants and reentrants who have not yet found a job have contributed a cumulative 0.034pp to the increase in the unemployment rate this month.So if only layoffs and resignations are considered, the unemployment rate only rises to approximately 4.406%;
3) The U6 unemployment rate dropped by 0.1pp to 8%;
4) Job finding rates remained at 24.7% as last month and did not continue to decline.
7. Since the BLS stated that it will no longer release non-agricultural data for October and will only release non-agricultural data for November, and the release time is later than the December FOMC, September’s non-agricultural data is the only “important employment data” that can be seen before the Federal Reserve’s December FOMC meeting.In addition, the BLS just announced the number of first-time unemployment benefits applicants from mid-October to mid-November, all of which fluctuated between 220,000 and 230,000.Therefore, all signals point to the U.S. job market still being in a “soft but not collapsing” state. The Fed is not worried about being “significantly behind the curve” for the time being. To be honest, it may or may not drop in December.My preference is not to cut interest rates in December.
8. In addition to the interest rate cut decision, there are two other highlights of the December FOMC.One is the situation of the Dot Plot (SEP), and the other is Powell’s position at the press conference..If interest rates are cut, both the SEP and the press conference are expected to be hawkish.But if interest rates are not cut, the likely combination is a hawkish SEP (for example, only one or even no interest rate cut in 2026) + a dovish Powell press conference (for example, emphasizing that there are still downside risks in the job market, promising not to fall behind the curve, and continuing to cut interest rates in January if necessary).
9.There is no more comfortable report for risk assets than a jobs report like this.What is Goldilocks?This is Goldilocks.
